Why We No Longer Supply to Brick-and-Mortar Stores
For over a decade Gutsy has been supplying Kraut and Kimchi to stores all around Australia. For years we have had distributors in every state and territory (except for the NT…sorry folks). But we've just decided to stop, this is a benefit to you.
For those not in the industry, here’s how distribution used to work for us:
- At Gutsy we ferment the freshest, organic veggies for weeks in oak barrels to make sauerkraut and kimchi.
- Various distributors that had a relationship with us would order, in bulk, at a special distributor price, cartons of kraut and kimchi. We would then load hundreds of cartons onto a pallet and book a refrigerated truck to deliver the pallet to the distributor storage facility in Melbourne, Sydney, Adelaide, or wherever else they were located.
- Distributors would then sell individual cartons to brick-and-mortar stores at a special wholesale price. These might be supermarkets, health food stores, butchers, deli’s etc.
- The store would then sell Gutsy sauerkraut and kimchi to the end customer for the final, retail price.
At the start of this year we made a decision to no longer sell to distributors, or to brick-and-mortar stores. Which was a crazy decision, as we had been pushing for over a decade to have Gutsy sauerkraut and kimchi available in as many stores around Australia as we could. We’ve been working hard, approaching distributors and working with them to make our products as available as we possible could, There’s a lot of work in that, flying around the country, visiting stores, meeting people doing tasting sessions and promotions in hundreds of stores.
Why then, did stop this to watch our hard work disappear? The main reason is money. There’s been crazy inflation over the last couple of years, and during a recent cost analysis, we realised that we were making no profit on a jar of Sauerkraut or Kimchi when selling through distribution channels. This has caused us to go backwards financially. So we had a choice:
- Increase our prices
- Lower our costs
- Choose a more profitable sales channel.
We can't increase our prices. We’ve already raised our prices twice in the last 18 months, we don’t want to do it again, and we probably can’t reasonably raise them to the point of making it sustainable for our business.
We can't lower our costs. we ferment our veggies to the highest possible standard, only fresh, local, organic veggies fermented in an oak barrels for the longest time period that we can. We don’t want to sacrifice health benefit, quality or taste, we only ferment what we want to eat, we can’t lower our costs any more in this regard.
The only real choice we could see was sticking with the more profitable sales channel, direct to customer.As we've thought about it though, there are other, real benefits to selling direct to customer:
- We get to have more fun making new seasonal products more regularly, rather than focusing on making the same six products over and over again (don’t worry, we’ll still keep the same old favourites).
- We can tell our customers the whole story of how each product is made and what it’s good for…there’s only so much you can communicate on a fridge shelf.
- We can build better customer relationships by communicating directly with them.
- We get more direct feedback on our products and operations from our customers, as feedback doesn’t get back to us very well when it has to get through wholesaler and distributor.
So to celebrate our business decision, we've dropped the price for all our regular sauerkraut and kimchi products. Better for us. Better for you.
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